November 16, 2017 at 1:07 PM

If you're operating used vans for business purposes, you need to know the ins and outs of van taxation. But taxation for commercial vehicles is quite different, and in many ways more complicated, than for used cars. Here, we'll explain everything you need to know about the taxes that apply to your used vans or pickups.

Vehicle Excise Duty

Since you need to use your van on public roads, you'll have to pay road tax, formally known as Vehicle Excise Duty or VED. Unlike for used cars where road tax depends to a certain extent on emissions, the rate for vans and picks ups is flat. The current rate is £240 for 12 months; you can also pay £132 for 6 months. If you choose to pay 6 months via direct debit, the rate will be a bit cheaper at £126. The above rules are for vans and pickups built after March 1st 2001. For commercial vehicles built before this date, your tax rate will depend on the size of your engine. If the engine size is equal to or less than 1,549cc, you'll pay £120 for 12 months and £82.50 for six months. If the engine size is larger than 1,549cc, the tax will be £245 for 12 months or £134.75 for 6 months. For some vans built after 2001, specifically, Euro 4 vans registered between March 1st 2003 and December 31st 2006 and Euro 5 vans registered between January 1st 2009 and December 31st 2010, you pay a lower rate of £140 for 12 months or £77 for six months.

Benefit in Kind Taxes

Benefit in Kind Taxes or BIK taxes will only apply to you if you use the van for private purposes as well as for business purposes. These are taxes on the benefits you get from your employer. The current fixed BIK tax rate for vans is £3,230. Your annual payment depends on your income tax bracket; those in the 20% bracket pay £646 a year, whereas those in the 40% bracket pay £1,292. The definition of a business trip is one that is made as part of work or to a temporary place of work. A very short private journey, such as taking the van out to a cafe during lunch break, would not affect the status of the van as business only. Regular use of the van for private purposes is that disqualifies it from being classed as a business only vehicle. If your employer pays for the fuel for private journeys in the van, you'll also be taxed on that. The annual rate is fixed at £610 but you'll only be required to pay either 20% or 40% of that, depending on which income tax bracket you fall into.

Exceptions to the Rules

As you might imagine, the rules are not entirely clear-cut. The BIK tax can be a bit lower if you pay your employer to use the van, or if the van is not available to your for 30 days or more. Zero emissions electric vans have a reduced BIK rate of only 20%; this rate is expected to be increased in 2018. You may be able to reclaim VAT on file used for business use; in order to reclaim VAT, make sure the van is not used for private journeys. There is some ambiguity about car-derived vans, double-cab vans and other unusual vehicles; for these, it is best to check with the V5C logbook.

 

A guide to taxation of vans and pickups



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